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Does The Buyer Matter When Selling A Manufacturing Company?

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Comments & Replies: 5     Views: 1737     Posted By: Timothy Cunha JD  Timothy Cunha JD: Business Broker, SF Bay Area



Topics: Buying A Business, Selling A Business     Tags: buying a business, selling a business



I hear the comment, "As long as they have the money that’s good enough for me” on occasion; but when it comes to a manufacturing company, it can make a big difference finding the right buyer is critical. Is the manufacturing company best suited to an absentee investor or a hands-on entrepreneur manager? An expert in this industry sector or a neophyte? An existing competitor or someone new to the industry?

Here is my opinion on this matter:

Who the buyer is can affect the negotiation process. The buyer could be an employee, a relative, an individual or corporate investor, a platform company rolling up synergistic operations, a competitor. For each of these a different approach is needed. Again, the experienced business broker can manage the process most effectively.

What experience have other brokers had identifying the right buyer for a manufacturing company? Would like to know your experiences regarding if the buyer truly does make a difference when buying a manufacturing company, please comment above.


From a business purchase financing perspective an owner (or the broker representative) of a manufacturing company being offered for sale should get their business "pre-approved" for acquisition financing to confirm that their asking price and deal structure they are offering can be financed - and what types of financing would be available so that potential buyers are not wasting their time. Also a professional pre-approval should give a profile of a potential buyers that would be approved for acquisition financing for a manufacturing company purchase.


Tim poses a great question that applies to all business purchases.

As an attorney who has started, bought and sold businesses personally as well guiding clients in the process I can tell you from my own experience that finding the "right" buyer is always critical - though the issues may be magnified in a small manufacturing business which can often rely on an owner's expert knowledge for success.

Whether you're providing seller financing and want to ensure that the buyer will make their monthly payments or if you're doing an all cash deal and simply want to reduce the likelihood that your buyer will sue you in the future it's key to make sure the buyer is the right fit for your business.

In manufacturing, or any other industry where owner expertise can be a factor in the business operations, it's important to both find someone who either has or can quickly learn the skills needed and to disclose the extent to which the seller has special skills and experience that are required to run the business successfully.

Note: Every business and transaction is different. This information is provided for general purposes only and should not be taken as or used as legal advice. If you are conducting a business transaction consult with your own legal counsel for advice specific to your business.


Mark makes some really valuable points. And, as an attorney myself (licensed in New Jersey, not California), I can't emphasize enough how important it is for buyers and sellers to retain an attorney with specific expertise in business transactions to represent them in the transfer of a business. Just like doctors, lawyers have specialties--you wouldn't consult a urologist to perform your heart surgery; the same logic applies to lawyers. A lawyer like Mark Chatow not only understands the legal aspects of the buy-sell transaction, but also comprehends and appreciates all the business-related nuances that can spell the difference between the transaction succeeding and failing.


Certain industries such as food and hospitality, the buyer can be brought up to speed through training on how to run the business, but there are other niche markets, such as those that specific manufacturing fields fulfill where it would be more difficult for the new owner who has no experience to step into. Many manufacturing companies the owner should have a competent level of expertise because they are the driving force of the company. In such a litigious state such as California, it's important for a business broker and seller to find the right buyer for a business especially if the business requires a high level of expertise, because if the buyer fails and was ill equipped to purchase the business then there is a high chance that they may seek damages from parties involved.


  Helpful Resources To Assist In Selling And Buying California Businesses
Rob Hartman: Business Broker, SF Bay Area

Business brokerage services in the SF Bay Area. I bring skill, integrity and energy to all of my clients and our projects. I'm accustomed to working with a wide variety of clients and their businesses; large or small, simple or highly complex. Get a free consultation by phoning 650-279-3097.

Ryan Clark, Business Broker, Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan at 310-652-8353.

Elizabeth McGovern: Escrow Services - SF Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Ken Oppeltz, Business Broker, San Diego County

We have been San Diegos premier business broker and merger and acquisition specialist since 1989. Staffed with some of the best-qualified and most experienced business brokers in the industry, our professionals have all earned or are candidates for the Certified Business Intermediary (CBI).

Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

George Lanza, Business Broker, At Plethora Business Sales

Plethora Businesses, a division of A Premier In Services, Inc., is a Business Intermediary Consulting Firm headquartered in Orange, California. Plethora specializes in the listing and sale of small and medium sized private businesses.

Peter Siegel, MBA - SBA Loans, Non SBA Financing Assistance

For over 25 years I have provided niche business purchase financial advisory and loan placement services with SBA and Non-SBA Loans, Retirement Plan Conversions, Private Investors, etc. Financing amounts available: $20K to $7MM. Call today to get pre-qualified or receive financing: 866-270-6278.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.


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